Nearly 60 percent fewer Marin households threatened with foreclosure

The number of Marin households threatened with foreclosure plummeted nearly 60 percent last quarter, consistent with statewide numbers and an indication of the real estate market's health, a data information service reported Tuesday.

One hundred notices of default were issued to Marin homeowners in the third quarter of 2013, compared with 241 in the same period of 2012, according to La Jolla-based DataQuick. In the first three quarters of 2012, 1,731 notices of default were sent, with 669 sent in the first three quarters of 2013, a 61 percent change.

A notice of default is the first step in the foreclosure process. It doesn't necessarily mean the home will be lost to foreclosure, but the number is significant because it predicts to some extent whether a large or small number of foreclosures is on the horizon.

"What's really new in the last 12 to 18 months is the surge in home prices. As values go up, people have more options for avoiding foreclosure," said Andrew LePage, a DataQuick analyst.

A local agent agreed with LePage's analysis.

"We have little inventory and a lot of buyers. There are going to be multiple offers on places, which is driving up the price of properties and lessening the possibility of short sales or foreclosures," said Lydia Puller, a Marin real estate agent who has specialized in short sales since 2007.

A short sale is when a home sells for less than what is owed on the mortgage. Homeowners sometimes resort to a short sale in lieu of foreclosure, and it may lessen the impact on their credit ratings.

As home prices soar, Puller's clients are faring better, she said.

"I've worked with quite a few clients where they initially thought the property would be a short sale, but then they get multiple offers and walk away clean, or with money in their hands," Puller said.

The median price of a home in Marin was $840,000 in September, which is $91,500 higher than the median in September 2012. For many, this 12 percent jump in prices meant that even if a homeowner was behind on his or her mortgage, he or she could sell the house, pay off the mortgage and avoid foreclosure.

"My objective is always to recover as much as possible so the seller can walk away whole. That's my primary goal, and in most cases I'm finding that it's possible these days," Puller said.

"On average, I'd say we've got about 2,500, 2,600 homes that are sold every year in Marin. Currently, when I look at short sales, from the beginning of this year we had 102 short sales that sold on the market," Puller said, noting that the year is not yet over.

"Last year, 94 homes sold in a short sale; in 2011 there were about 157 and in 2010 there were about 182. In 2009, there were about 228, and in 2008, there were about 270. So we're steadily going down," Puller said.

Notices of default dropped 58.5 percent in Marin during the third quarter of 2013 and 58.6 percent in California as a whole. Actual foreclosures plummeted 52.7 percent in Marin, at 26 foreclosures, DataQuick reported.

In addition to home price appreciation and a stronger job market, a variety of government foreclosures avoidance efforts are also behind the drop in notices of default, according to DataQuick. Puller concurred.

"California's Homeowner Bill of Rights is slowing down the foreclosures," Puller said. "If they (the homeowner) is in the foreclosure process, everything has to stop if they are doing a loan modification. Before, the lenders could foreclose more quickly, but with the Homeowner Bill of Rights there are more checks and balances in place."

The picture is still not rosy for every homeowner in trouble, though, Puller said.

"There's a caveat. With the last possibly five or so transactions, we have had multiple offers and we submit everything to the lender knowing it should go through — but the lender says no, we will not approve this sale. The lenders are willing to let the property go into foreclosure because they can recover more on the back end. It's a big tax write-off for them," the agent said.

In general, however, Puller agreed that prospects are improving for her clients, and a DataQuick executive saw the situation in a similar light.

"Cleanup of the foreclosure mess is ongoing, but it's difficult to imagine a huge new wave," said John Walsh, DataQuick president.